Reason Foundation

Google Tests the Privacy Paradox

This week Google announced that it is grouping 60 of its Web services, such as Gmail, the Google+ social network, YouTube and Google Calendar, under a single privacy policy that would allow the company to share user data between any of those services. These changes will be effective March 1.

Although we have yet to see it play out in practice, this likely means that if you use Google services, the videos you play on YouTube may automatically be posted to your Google+ page. If you've logged an appointment in your Google calendar, Google may correlate the appointment time with your current location and local traffic conditions and send you an email advising you that you risk being late.

At the same time, if you've called in sick with the intention of going fishing, that visit to the nearby state park might show up your Google+ page, too.

The policy, however, will not include Google's search engine, Google's Chrome web browser, Google Wallet or Google Books.

But let's not rush to condemn this move. I, for one, want to see what happens because Google is boldly putting the privacy paradox to the test.

Going by my own Google search, the term "privacy paradox" has been kicked around for almost ten years. Boiled down, it describes the repeated finding that while individuals express a high degree of concern for privacy protection online, few, in practice, take advantage of privacy safeguards when they are offered.

This apparent contradictory behavior has been noted in a number of studies, including a noted 2007 paper in the Journal of Consumer Affairs. A 2005 Pew Internet Study, cited at the time by Forbes, found that that 54 percent believe that Web sites invade their privacy when they track behavior. But the same study showed that 64 percent were willing to give up personal information to get access to a Web site.

In the marketplace, when search engines like Google began facing vocal pushback from users and regulators on its tracking of user search histories, one of Google's competitors, Ask.com, tried to differentiate itself by unveiling AskEraser. Just like it sounds, the tool allows users to opt out of search tracking. As Forbes reported, users shrugged and AskEraser did nothing for Ask's market share, while Google's continued to grow.

Contrary to the first hysterical media reports, Google is not recording your whole digital life. There indeed is an opt-out: you don't have to be part of the Google service ecosystem, which is far from the only game in town. Remember, browsing and search are outside this program. Everything else is available from other sources. Moreover, data is only shared if you're logged in under your Google username. Otherwise you can look at all the YouTube videos and Google maps you want without anyone being the wiser.

I'll admit the biggest outcry may come over the policy with regard to Android phones. Since you're technically logged into your phone all the time, it seems tougher to opt out. But there are other devices aside from Android, even from Verizon, so consumer will have alternatives without having to change service providers. Nonetheless, given the popularity of the combination of mobility and social networking, seen not only in Google and Facebook, but in Twitter, Yelp! and Foursquare, it is arguable that a majority of users are not as concerned about their privacy as advocates of more restrictive regulations believe.

And arguable is the operative word. There indeed may be enough significant user backlash that Google backs off. In the last six months we've seen at least two instances of rapid market correction--Netflix's decision not to go through with structurally separating mail and online video rental accounts and Bank of America's reversal of its plan to charge online banking fees. Both occurred before the government could step in a provide its own (and no doubt clumsy) remedy.

Then again, there's a significant body of research that suggests that, in spite of their own complaints, users may opt to accept greater benefits and convenience in exchange for more disclosure about their habits. With this mind, it will serve consumers best if companies like Google are allowed to experiment with the privacy paradox to find where actual boundaries are, rather than hamstringing potential innovation by pre-emptively and blindly setting them.